How to Develop a Minimum Viable Product Approach to Value Delivery While Still Telling A Compelling ROI Story
According to the July 2022 Economic Indicators Report, retail inventories for July were up 20.5% from July 2021. For retailers, the reality of dead inventory is not only impacting bottom lines but increasing the need for accelerating planning transformations. The challenge for retailers is that planning transformations take time. The good news is whether you are at the beginning, middle, or end of your transformation journey, there is still an opportunity for your organization to develop an MVP (minimum viable product) approach to value delivery while telling a compelling ROI (return on investment) story.
1 | Pause and center on why this work is both challenging and important
Technology solutions now offer a level of sophistication and flexibility long demanded by retailers seeking transparency and efficiency in their end-to-end inventory planning. As viable solution options emerged over the last five years and the global pandemic underscored the criticality of nimble inventory decisions – organizations invested in large-scale transformations to modernize their end-to-end inventory planning. The downside, as transformation teams began to unpack and document ways of working, they uncovered a current state filled with extensively manual and heavily nuanced processes along with disparate (inconsistently sourced, calculated, and defined) data. In fact, over 90% of companies still rely on Excel spreadsheets as the basis of their sales and operations planning. While this reality certainly carries with it a level of complexity, there, fortunately, is — even in these seemingly manual and disjointed ways of working — quick wins and easy ways to streamline processes.
- Own the narrative – From the origin story to the present day, speaking honestly, realistically, and transparently about your transformation journey goes a long way in earning a continued commitment from your stakeholders
2 | Set (or re-set) the stage for success by thinking lean and planning in horizons
Multiyear transformations require the adoption and reinforcement of a lean mindset. This mindset shift helps to set the expectation with employees that success will happen through small, incremental value delivery, where there is no finish line, only progress towards an evolving goal of operational efficiency. With this recognition, organizations must navigate hard choices about what to preserve, where to make changes, and when to stop certain activities altogether.
“Organizations with effective supply chain digital transformation roadmaps are +3x as likely to see their digital supply chains succeed” - Gartner
- Anchor the work in business metrics and success criteria to help equip teams to navigate critical trade-off decisions. Example metrics and criteria might include, improved profit margin, reduced item cost, standardization of team structure, the reduced total number of ERPs, and improved speed to market may help your team track success in the short and long term.
- Concurrently, create guiding principles that reinforce a bias towards not recreating what exists today but starting with the question, “How might we approach this solution differently?".
3 | Understand the distinction between the art and science of planning
One of the biggest drivers of increasing costs and expanding timelines is the temptation to shift all the existing planning processes into new systems. It is critical that teams establish a clear understanding of where they can leverage systems to standardize the “science” of what is performed, to free up time for employees to engage in the “art” of their craft. Building this muscle is hard, but often starts by helping teams step back and ask critical questions about their existing ways of working, placing value not in replicating the present but in finding new ways to work in the future.
To help define the distinction, encourage team members to challenge the accepted norms. For example, leave space to wrestle with questions such as:
- Where could standardization have the biggest positive business impact? Is it the overall seasonal line management? In-season open to buy process? Defining and setting financial targets and option accounts?
- What are processes we constantly repeat with little to no thought power behind them? Is this an opportunity to automate so we can refocus this time to more strategic areas?
- Why do we do it this way and does this have to persist in the future? Is it worth recreating?
- How much value do we really get out of this process and is the value worth the incremental effort?
4 | Intentionally define MVP releases and how they deliver value
From there, get tactical by creating a shared understanding of how your organization will define MVP, focusing on where work can define value for the organization. Where planning transformations often fail, is falling into the trap of assuming that every incremental MVP release will deliver value to everyone. Creating alignment on the value delivery opportunities upstream for end users seeking process efficiency and downstream for technical partners seeking operational stability will help all project team members focus on the broader wins rather than hyperfocus on their specific domain.
- Build advocacy for MVP releases by sharing successes broadly and consistently tying them back to your foundational success metrics. Repeating MVP communications helps to build a coalition of understanding around the value delivered. Work to find parity between releases so that upstream and downstream partners remain engaged and can see the progress toward longer-term goals
5 | Pacing your ROI with MVP definitions
While a planning transformation may feel unpredictable, there are three predictable phases that you can leverage to both frame an ROI approach and to help pace and align MVP decisions.
Phase 1 – Centralized and comprehensive
In this initial phase, you are investing resources in discovery work to identify data sources and unpack processes that have been built over years and are often extremely siloed and poorly documented.
- Establish workstreams that can focus on a vertical area of expertise. For example, data, integrations, and processes (by plan type) and help define your early MVPs with a specific targeted group of users. These users will set the stage and act as champions for ongoing work.
- Connect those workstreams to a broader transformational program office (that includes change management, communication, and training) to ensure that as discovery takes place, cross-functional learnings and opportunities are shared and prioritized while governance for the longer-term execution of the work is well established.
ROI & MVP Considerations:
- Cost – In this initial phase you are investing in building out a broader program framework and the internal transformation muscles that can carry the work forward year-over-year while your project teams prioritize uncovering, documenting, and collating not only the as-is but also framing the to-be.
- Return & MVP – Focus on where you can gain internal efficiencies in ways of working and building toward data maturity. Remember, a lower initial ROI at the first MVP release might unlock a high ROI in future releases. MVP opportunities may include standardizing data definitions, aligning roles and responsibilities, and building new cross-functional process flows (even if manual). Once this work is finished, the structural components can be implemented more quickly and release even bigger value.
Phase 2 – Federalized and fast
As you roll into the second phase of the transformation, you begin to implement your initial technical MVPs and start to move fast.
- Begin to federalize your workstreams so that they can pace separately, act responsively, and train effectively – with your transformational muscles now built, allowing more workstream agency will ensure your organization is able to capitalize on every opportunity (large and small)
- Streamline your program reporting to focus on transformational maturity – a forward-looking view of how you will evolve capabilities year-over-year
ROI & MVP Considerations:
- Cost – Your investment shifts, placing less focus on a centralized program office and placing more resources against individual workstream needs, including training, change management, and technology development.
- Return & MVP – Maintain a future-focused roadmap to demonstrate the scalability of your MVP releases. Hold firm to those guiding principles that reinforced the value of letting go of old ways of working — nuances that once delivered value but are no longer necessary.
Phase 3 – Scaled and Operationalized
As you enter this phase you have implemented innovative technologies, adapted to new processes, and matured your data capabilities.
- It is here that workstreams once again converge to ensure a sustainable process for continued scaling and operational success.
- Establish your future-focused roadmap, a roadmap that will extend past your MVP and help to continue advancing your new capabilities.
ROI & MVP Considerations:
- Cost – The long-term cost of ownership becomes clear (both for the business and technical teams), including new roles, products, and processes.
- Return & MVP – Revisit manual processes for further automation or removal. Look for opportunities to scale new processes further into the organization to capitalize on technical capabilities and increase standardization.
Retail planning transformations take time and require a continued dance between short-term gains and long-term vision as well as the ability to flex between large programs and small agile teams. Another form of balance that was showcased in our last blog, was the importance for retailers to first understand how healthy tensions bring a guiding force to planning transformations – an exercise we leveraged with multiple clients over the last several years. Equipped with this knowledge and coupled with the best practices above, your organization can successfully transform and experience a measurable return on investment at every stage of the journey.
The key to success is balancing your investment with immediate ways to define success and ensure you continue to deliver value in the present.